The poverty line is commonly thought of as two measures of policy, one of which is a poverty threshold and the other is the poverty guideline. They accomplish essentially the same goal of finding a standard of poverty, no matter the area in which a person lives, but are calculated and used in different ways.
The poverty threshold was initially developed in the mid-60s by the Social Security Administration and it is based on food costs and the assumption, which was accurate at the time, that the average household spent about one-third of their income on food. However, in the modern day, a family will spend closer to one-fifth of their income on it. These thresholds were also dependent on such things as farm-status and if the head of the household was female, but they were discarded in 1981, however separate thresholds for the elderly remain. The threshold was used mostly for statistical analysis of poverty, and is not meant to gauge eligibility for services.
The poverty guideline, the other federal measure of poverty, is intended to be a simpler method of calculating the line since it is based solely on number in the household. They are re-issued each winter by the Department of Health and Human Services to reflect changes made during the year based on the Consumer Price Index. These guidelines are used primarily for administrative purposes to determine eligibility for federal aid programs.
However, there remains an issue of how functional these gauges of poverty truly are because these income levels do remarkably little to actually be able to live. For instance, from the 2010 poverty guidelines, a single mother and her child require $14,570 a year, but according to basic budget calculators (which can be very interesting to see cost of living differences and a link can be found in the “Sources” area), they would need $48,021 to live in this area of Massachusetts. Yes, these numbers may be somewhat padded, but there is still a huge disparity that ought to be bridged.
The poverty threshold was initially developed in the mid-60s by the Social Security Administration and it is based on food costs and the assumption, which was accurate at the time, that the average household spent about one-third of their income on food. However, in the modern day, a family will spend closer to one-fifth of their income on it. These thresholds were also dependent on such things as farm-status and if the head of the household was female, but they were discarded in 1981, however separate thresholds for the elderly remain. The threshold was used mostly for statistical analysis of poverty, and is not meant to gauge eligibility for services.
The poverty guideline, the other federal measure of poverty, is intended to be a simpler method of calculating the line since it is based solely on number in the household. They are re-issued each winter by the Department of Health and Human Services to reflect changes made during the year based on the Consumer Price Index. These guidelines are used primarily for administrative purposes to determine eligibility for federal aid programs.
However, there remains an issue of how functional these gauges of poverty truly are because these income levels do remarkably little to actually be able to live. For instance, from the 2010 poverty guidelines, a single mother and her child require $14,570 a year, but according to basic budget calculators (which can be very interesting to see cost of living differences and a link can be found in the “Sources” area), they would need $48,021 to live in this area of Massachusetts. Yes, these numbers may be somewhat padded, but there is still a huge disparity that ought to be bridged.
Sources:
http://www.irp.wisc.edu/faqs/faq1.htm
http://aspe.hhs.gov/poverty/09poverty.shtml
http://www.census.gov/hhes/www/poverty/poverty.html
Calculators
http://www.epi.org/content/budget_calculator/
http://nccp.org/tools/frs/budget.php